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IL&FS PE sets $1 bn target for infrastructure fund

25 July, 2017

IL&FS Investment Managers Ltd, the private equity arm of Infrastructure Leasing and Financial Services Group, has received commitments for a $1-billion (Rs 6,450 crore) fund that will invest in infrastructure and allied sectors, a financial daily reported.

IL&FS CEO Ramesh Bawa told The Economic Times that the fund will invest in Indian companies in the roads and power sectors, besides other growth areas such as logistics.

The fund has received investments from South Korean and Japanese pension funds, the report said, citing two unidentified people.

The firm seems to have doubled its target corpus for the infrastructure fund; in April 2016 its then­ CEO Archana Hingorani had told the Mint newspaper that IL&FS was planning a $500 million fund.

Bawa also told The Economic Times that IL&FS is collaborating with the Islamic Corporation for the Development of the Private Sector to create a $1 billion debt fund to invest in sub-Saharan Africa.

Bawa did not respond to a VCCircle request for comment.

The launch of the two funds – among IL&FS’ most ambitious ones so far – is in line with plans outlined in its 2015-16 annual report.

The IL&FS India Infrastructure Fund will invest in growth and operational assets and has been structured to target investors keen on receiving a regular yield together with emerging market returns, the annual report said.

The annual report also said that the first phase of fund marketing and fundraising efforts will focus on investors in Japan, South Korea and Australia. “Similarly, given the structured nature of investor demand in real estate, a listed product is currently being marketed,” it said.

Other infrastructure funds that are mobilising capital include Morgan Stanley’s maiden vehicle for the sector. Kaup Capital is also on the road to raise a smaller infrastructure fund. The other key player in infrastructure is IDFC Alternatives, which closed its last infrastructure fund at $900 million in 2014.

IL&FS funds
The firm invests across three asset classes, including real estate and infrastructure. It also has sector-agnostic funds.

A decade ago, IL&FS and Standard Chartered had formed a joint venture to invest in infrastructure assets. The Singapore-based entity called Standard Chartered IL&FS Asia Growth Infrastructure Fund had a corpus of $568 million.

In 2013, it launched an infrastructure debt fund that raised Rs 1,380 crore.

In the private equity asset class, it raised a smaller fund in November last year. The $60 million Tara Fund IV will focus on healthcare and life sciences, education and skill development, clean energy, financial inclusion, food and agriculture, water, urban infrastructure and connectivity services, the firm had said.

Earlier this year, it launched a platform for stressed assets by forging a joint venture with American private equity firm Lone Star. The platform has a target corpus of $550 million to invest in stressed asset opportunities.

In 2010, it emerged as India’s top homegrown PE manager after acquiring Saffron Asset Advisors, which advised Euronext’s realty fund. Since then, IL&FS has had to face fierce competition from peers such as ICICI Venture and IDFC Alternatives. IL&FS manages assets of around $3.2 billion.

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IL&FS PE sets $1 bn target for infrastructure fund

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